The Bernie Sanders Left Just Dumped a Horse Head in Paul Krugman's Bed

To summarize Galbraith's letter, much of which I reproduced below: Paul Krugman and several other prominent economists have been attacking Bernie’s economic plan for being overly optimistic in predicting it would result in a 5.3 percent rate of economic growth. Krugman even calls it “voodoo economics.” But, as Jamie Galbraith, former executive director of Congress's Joint Economic Committee, points out:

1. That projected growth rate is hardly voodoo. It occurred in 1983, 1984, and 1985.

2. The research on which the estimate is based uses standard economic impact assumptions, similar to that used by the Council of Economic Advisors.

3. The large projected impact of Bernie’s plan stems from its large scale and ambition (which is the lesson of Reaganomics as well).

So why do you think Krugman and these others attacking Bernie's plan so ferociously?

This is fun, in effort to takedown Krugman, lefty Galbraith admits some serious truth in his letter to the mainstream economists, Krueger, Goolsbee, Romer and Tyson, who criticized Bernie economics as supported by Gerald Friedman. Galbraith writes :

To be sure, skepticism about standard forecasting methods is perfectly reasonable. I'm a skeptic myself. My 2014 book The End of Normal is all about problems with mainstream forecasting.

In the specific case of this paper, one can quibble with the out-year multipliers, or with the productivity assumptions, or with the presumed impact of a higher minimum wage. One can invoke the trade deficit or the exchange rate. Professor Friedman makes all of these points himself.

Galbraith even goes so far as to drag in an alleged Reagan tax cut period as evidence that Sanders type projected growth of over 5% is achievable:

So, let's first ask whether an economic growth rate, as projected, of 5.3 percent per year is, as you claim, “grandiose.” There are not many ambitious experiments in economic policy with which to compare it, so let's go back to the Reagan years. What was the actual average real growth rate in 1983, 1984, and 1985, following the enactment of the Reagan tax cuts in 1981? Just under 5.4 percent. That's a point of history, like it or not.

When a lefty brings in evidence of growth during a Reagan tax cut period, you know this is serious war. (Note: For the truth about Reagan tax cuts, see here.)

And then Galbraith provides evidence that Krugman is not a serious economist:

What you have done, is to light a fire under Paul Krugman, who is now using his high perch to airily dismiss the Friedman paper as “nonsense.” Paul is an immensely powerful figure, and many people rely on him for careful assessments. It seems clear that he has made no such assessment in this case.

Instead, Paul relies on you to impugn an economist with far less reach, whose work is far more careful, in point of fact, than your casual dismissal of it. He and you also imply that Professor Friedman did his work for an unprofessional motive. But let me point out, in case you missed it, that Professor Friedman is a political supporter of Secretary Clinton. His motives are, on the face of it, not political.

Of course, Krugman does have the higher ground in this particular battle because Bernie economics is absurd. But what Galbraith says about Krugman's airily dismissiveness from his high perch is also true. This is the entire modus operandi of Krugman's writing approach at NYT.

But the warning by Galbraith to Krugman is horse head serious:

For the record, in case you're curious, I'm not tied to Professor Friedman in any way. But the powerful – such as Paul and yourselves – should be careful where you step.

3 comments:

Steven GreenbergFebruary 21, 2016I am at a loss as to why Krugman would put his reputation at such a risk that he would behave this way. Although, this is hardly new behavior for him. I am beginning to think he is not a liberal and that he has no soul.

"For example, Professor Friedman starts with a fiscal multiplier of 1.25, and shades it down to the range of 0.8 by the mid 2020s. Is this “not credible”? If that's your claim, it's an indictment of the methods of (for instance) the CBO, the OMB, and the CEA."

Wow. The more and more you spend, the richer you get. That's gotta be true, right?